Overheads are not usually the first thing that comes to mind when we think about business leaks. However, when overheads are high and unnecessary, and you’ve got subscriptions running for months without ever using them, this is exactly where money quietly drains from your business.
I’ve recently had to tighten up my own overheads, and I was shocked at how many subscriptions and small outgoings had stacked up and started to eat into my bottom line. Some I hadn’t even thought about cancelling until I properly assessed how much I was actually using them. In this blog, I’ll be covering the different types of overheads that can impact your Amazon business, how they eat into your profits, how to analyse them and ways to reduce them.
Types of Overheads
Overheads come in many forms, and in an Amazon FBA business, they can quickly add up. Subscriptions are one of the most common examples, this could include lead groups, accountancy software, prep centre subscription, analysis tools to name a few.
Other overheads can include the costs associated with using a prep centre, FBA fees, prep materials if you handle prep yourself, expenses like fuel and food when out working, and even smaller recurring costs you might not think about on a daily basis. All of these fall under overheads, and while some are absolutely necessary, others are not, which is where you need to pay close attention.
How Overheads Can Eat Into Your Bottom Line
It’s surprising how fast overheads creep up. Many sellers focus on their gross profit but forget to account for how much is being eaten away in the background by subscriptions and expenses. For example, if you’re pulling in £2,000 a month on STK, that’s not your real figure. Your real figure is what’s left after all overheads have been deducted.
Subscriptions can be particularly sneaky, a new tool, a new group, or a new bit of software might sound great and may even generate some leads, but if they’re not producing a return that outweighs their cost, they’re eating into your bottom line.
Then there are unavoidable overheads like FBA fees, prep centre costs, and fuel. These are part of the business model, but even here you need to keep an eye on efficiency. The more aware you are of your outgoings, the more clarity you’ll have on your true profit margins.
How to Analyse and Assess Your Overheads
The best way to analyse your overheads is to break them down clearly and track them. A method I use is to go through my buy sheet and check where I’ve purchased my leads from over the past three months. This helps me see which services or subscriptions are actually generating leads and which ones are just costing me money.
I’ll tally the results, put them into a chart, and quickly identify which subscriptions are worth keeping and which need to go. If a subscription isn’t providing value, I cut it.
Another useful step is to look at strategy changes. For example, I recently shifted away from A2A EU and focused more on OA. Because of that change, I was able to cancel one of my EU subscriptions, saving money without affecting results.
Beyond subscriptions, you should also review your general business expenses such as fuel, food, and other recurring costs. Going through your accounting software like Xero, exporting the data, and putting it into a spreadsheet makes it much easier to spot patterns. The more detail you have, the easier it is to make informed decisions.
Ways to Reduce Overheads
Reducing overheads usually comes down to taking on more responsibility yourself or streamlining how you operate. For example, you could make yourself more self sufficient in sourcing or give your sourcing VA more responsibility, allowing you to cancel some of the lead group subscriptions. You could also change your sourcing strategy to rely less on paid groups and instead develop your own sourcing methods.
Another way is to look for tools or software that combine multiple functions into one, so you can replace several subscriptions with a single, cheaper option. When reviewing software, always consider cheaper alternatives, but don’t sacrifice quality or operational performance for the sake of cutting costs. You should also look at minimising personal expenses that you put through the business, such as fuel and food. While these may seem small, they add up over time.
The key point is to be proactive. Don’t just let subscriptions or expenses run unchecked. Review them regularly, assess their value, and cancel or replace what doesn’t serve your business.
Final Thoughts
Overheads might not feel like a direct business leak at first, but when left unchecked, they absolutely are. They slowly drain your profits and reduce your cash flow, often without you noticing until it’s too late.
It’s easy to get carried away and sign up to multiple subscriptions or let small expenses slide, but these habits can eat into your bottom line just as much as missing units or under reimbursements. Staying on top of your overheads, reducing unnecessary costs, and streamlining your tools and processes will directly increase your profit margins and help prevent money from leaking out of your business.
